Not A Savings Glut

It's global excess liquidity:

According to our calculations, global excess liquidity has been on a steep upward trend since about 1995. Between 1995 and 2005, the credit-to-GDP ratio has risen by 25%, broad money-to-GDP by 32%, and narrow money to GDP by no less than 55%. The steep rise especially in narrow money reflects the fact that this aggregate is particularly sensitive to short-term interest rates, which were reduced sharply following the bursting of the equity bubble in 2000. Thus, monetary easing has produced an unprecedented amount of liquidity not needed to finance transactions in the real economy and available to chase bond, equity and other asset prices higher. Moreover, despite the Fed’s rate hikes since June 2004, which have led to a slight decline in excess liquidity in the US and China this year (on the narrow money-to-GDP measure) global excess liquidity has become even more abundant this year. Global narrow money growth outpaced global nominal GDP growth by 1.4 percentage points (pp), broad money growth outpaced GDP by 2.7 pp, and credit growth outpaced GDP by 3.6 pp. The main reason was a significant increase in excess liquidity in the euro area on all three measures. Thus, it is fair to say that the ECB has become the main financier of global asset price inflation this year.